Mary Kautzman, Esq, Greenshades’ Compliance Manager, discusses the most common causes, the costliest outcomes, and best practices for avoiding payroll errors.
This webinar covers four significant topics:
- Payroll Inaccuracies & Common Causes
- Key Economic Factors that Amplify the Impact
- Counting the Cost: Long & Short-Term Impact of Errors
- How Greenshades Helps
Watch the On-Demand Webinar:
Read the Webinar Recap:
- Common Causes of Payroll Errors
The most common payroll errors are often small inaccuracies and miscalculations that can have an immediate impact and lead to major problems.
Misclassifying Employees: It is crucial to ensure that your employees are classified correctly as state and region-specific guidelines and regulations affect payroll. Classifications are based on actual duties, not titles, so it's critical employees are classified correctly as exempt or non-exempt.
Inaccurate Timekeeping: Failing to capture the entirety of working hours (for example, hours including "donning" and "doffing"). This can include but is not limited to the failure to capture time spent traveling (whether commuting to work or between different job sites), missing time spent in training or mandatory events, or various forms of fraud like "buddy punching" or unapproved overtime.
Inaccurate Calculations: This one seems explanatory, but failure to correctly calculate payroll can lead to various issues with profound impact. Some examples would include but are not limited to: missing overtime, maculating pay differentials, misapplication of nexus and reciprocity rules, and failure to keep up with regulatory changes.
Why do these minor problems have such a significant impact? While minuscule in processes, all these errors result in costly payroll errors like lost time and decreased productivity, wasted financial resources, payroll leakage, damaged worker morale, and weakened employer rapport.
- Current Events Amplify the Impact of Errors
Payroll errors and delays can be devastating; with rising inflation, increasing debt, economic stress, and the workforce still suffering/recovering from the pandemic, it is more important than ever to have a payroll system you trust and can rely on.
*Here are some stats:
- 1 in 5 employees say they run out of money every week
- 2/3 of Americans live paycheck to paycheck
- July 2022 Inflation was at 8.5%
- 68% of American workers do not have money set aside for emergency use
- 1 in 4 employees have received a paycheck with errors
- 1 in 6 said a single inaccuracy would make them quit their job
- Replacing workers in this job market is more costly and time-consuming due to the employee-driven job market
The cost of living, price of food, cost of transportation or gas, as well as unprecedented expenses like medical bills or repairs, are weighing down Americans – making it crucial that they receive accurate paychecks on time.
*for more stats and sources, check out the on-demand webinar, The True Cost of Payroll Errors
- Counting the Costs
As stated above, replacing workers is incredibly costly and time-consuming. The current range of costs to replace employees is wide but usually 30% (average) to 200% (executive) of the employee's annual salary.
Direct costs can include:
- Temporary help (salary +20%)
- Recruiting and internal costs (20% of first-year compensation)
- Onboarding and orientation (40+ hours from HR)
Indirect costs can include:
- Damage to employer brand
- Ramp-up and training time
- Diminished productivity
- Morale challenges
- $6 billion in penalties assessed by the IRS in 2020 alone (missing payments and miscalculations on employment taxes were the most common causes)
- $845 is the average price of an IRS penalty as the result of a mismanaged payroll process
- FMLA, FSLA, overtime calculation, and other similar errors can result in more significant penalties
The Long-Tail Effects
- The Downward Spiral – a smaller staff with an increased workload faced with morale challenges is at a greater risk of making mistakes
- *Economic sensitivities are already running high:
- 63% of employers state the economy is beginning to impact their business
- 83% of employers state the economy is beginning to impact their workers
*based on Greenshades Q2 2022 Market Sentiment Survey
- How Greenshades Helps
Greenshades offers a cloud-based dedicated Payroll & HR Platform focused on proactively monitoring, managing, and addressing changes. Why should companies work with Greenshades to avoid costly payroll errors?
- Greenshades is configurable to your unique business needs, operating environment, and industry
- Add-on services and enhancements like learning opportunities, financial wellness tools, and more empower your employees and their working experience
- Personalized and prioritized customer care that makes sure you never “go it alone”
- Onboarding is a breeze with the ability to automate new hire paperwork, wizard-like tools that walk employees through the onboarding process, and automated validation for necessary documentation like SSNs
- Market changes, like new tax policies, are automatically applied to the platform with automatic updates
- Enhanced compliance capabilities such as EEO tracking, certification management, and stress-free reciprocity agreements
- Individual tax return preparation is made easy by tax code automation and staying ahead of deadlines
- Monitor and manage employee ACA eligibility by receiving notifications and alerts so you can always stay one step ahead and avoid fines
- Automated calculations of disposable income, so withholdings and disbursements are handled quickly and correctly for stress-free garnishments and deductions
- Automatic application of minimum wage credit for any employee falling below the line, including those who rely on tips, keeps your business minimum wage compliant
- Automating payroll processing allows for more strategic use of personnel resources
Watch the full on-demand webinar, The True Cost of Payroll Errors
Visit go.greenshades.com and click on the resources tab where we keep you in the know.